Steel production is projected to rise by about 5 percent in 2005 and 3.5 percent in 2006.

PARIS, Jan. 16--Worldwide steel output, powered by robust Chinese economic momentum, is expected to hit a new record this year, but the dizzying surge in prices seen in 2004 should eventually spark resistance from consumers, the OECD has predicted here.
After breaking through the one-billion-ton barrier in 2004, production is projected to rise by about 5 percent in 2005 and 3.5 percent in 2006, according to the Organization for Economic Cooperation and Development.
Output last year came to 1.05 billion tons, up 8.7 percent from 2003. China was responsible for more than a quarter--26 percent--of the 2004 total.
While steel prices are expected to edge still higher in the first half of 2005, "they will then stabilize and in some cases undergo a readjustment," said Franco Mannato, a steel economist at the OECD.
"We can't have an infinite increase in prices," he told AFP. "Steel after all is one of the most important base materials in the world and price increases have repercussions everywhere. We have to realize that at a certain moment steel producers ... will have to limit the increases."
Steel industry consumers will become increasingly reluctant to accept continued price hikes, he warned.
World Steel Dynamics (WSD), a US steel research group, has even spoken of a possible "strike" on the part of buyers, notably in Europe where they are suffering from the effects of a weaker dollar as well as higher steel prices.
"The steel industry has to be careful," added Mannato. "At a certain price level, substitute materials will be increasingly considered. We've seen it in the automobile sector where certain marques now use aluminum."
But Mannato added that talk of a buyers' strike was exaggerated. "Everyone needs steel," he said.
In addition Chinese imports, which have driven the price surge, declined 24 percent last year to around 30 million tons.
Mannato said the cut-back in Chinese steel imports should be maintained in 2005 and 2006 while exports, which may have doubled last year, will likely continue to grow.
Economists are meanwhile predicting that the currently fragmented global steel industry should see further consolidation in the years to come similar to movements that produced such giants as Arcelor in 2002 and Mittal in 2004.

TOKYO, Jan. 16--Two Japanese companies have sought government permission to drill for oil and natural gas in a disputed area in the East China Sea where Chinese companies are already at work, AFP quoted a press report as saying on Sunday.
Japan Petroleum Exploration Co. and Teikoku Oil Co. have sought approval to explore in an area some 450 kilometers (280 miles) west of Japan's southern Okinawa island, the leading business daily Nihon Keizai Shimbun reported.
The government, which has hesitated to grant drilling rights in the area after awarding provisional concessions to Japanese firms some three decades ago, is expected to approve the request before March 2006, the newspaper said.
The two companies will possibly launch undersea surveys and test drilling operations with government financial help, Nihon Keizai said.
In August 2003 China began drilling several kilometers west of a line in the East China Sea proposed by Tokyo to mark the boundary of the 200-nautical-mile exclusive economic zones of the two countries.
Japan protested the drilling but China, which has not recognized this demarcation line, said its economic rights extend almost as far as Okinawa.
Last July, Japan, which relies heavily on the Middle East for its oil needs, launched undersea resource surveys on its side of the line.
The two governments are continuing talks on natural resources issues with China proposing joint development of natural gas. The issue is compounded by a territorial row in the East China Sea over the Senkaku islands, known as Diaoyu, which lie between Taiwan and Japan and are also claimed by Taipei.
China and Taiwan laid claims to the Japanese owned islands after a UN economic agency reported oil deposits in the East China Sea.
According to Sunday's Nihon Keizai report, Japan Petroleum and Teikoku Oil intend to merge their concessions with those of two other firms they plan to acquire.
The Japanese concessions, covering about 250,000 square kilometers, were divided about 35 years ago between Japan Petroleum, Teikoku Oil, Fuyo Petroleum Development Corp., and Uruma Resources Exploration Co.
Japan Petroleum recently bought all outstanding shares in Fuyo and aims to purchase Uruma, which Teikoku Oil is also seeking to acquire, the daily said.

NEW DELHI, India, Jan. 16--Indian Prime Minister Manmohan Singh said India needs to catch up with neighboring China in securing energy supplies, suggesting competition between the world's two most populous nations for oil and gas fields may intensify, Bloomberg reported.
Oil & Natural Gas Corp., the country's biggest explorer, and other Indian state-run companies face increased competition from Chinese rivals including PetroChina Co. in bids to drill fields in Russia, the Middle East and Africa.
"We need to strengthen our oil companies in launching them as global firms," Singh said at Petrotech 2005, a conference organized by Oil & Natural Gas in New Delhi today. "China is ahead of us in planning for its energy security--India can no longer be complacent."
India and China are both struggling to prevent domestic oil production from declining as their biggest fields age, forcing them to seek stakes in ventures from Russia to Australia and Iran. China's imports have risen over the past decade from zero to 40 percent of local consumption as demand more than doubled. India imports 70 percent of its oil needs.
"I urge our oil companies to think big, to think creatively," Singh said.
India's Petroleum and Natural Gas Minister Mani Shankar Aiyar's earlier proposed that Oil & Natural Gas, Indian Oil Corp., the country's largest refiner, and other state-run oil companies be strengthened by merging them into one or two companies.
Prime Minister Singh's "remarks on further strengthening oil companies means a green signal for the merger plan," Indian Oil's Finance Director P. Sugavanam said in an interview at the conference. "The prime minister has clearly urged oil companies to find exploration opportunities overseas."
A committee appointed by India's oil ministry is currently studying the feasibility of merging state-run oil companies.
India needs to take measures to raise oil production as increased demand would force the country to import 85 percent of its oil needs within 20 years, Aiyar said at the conference.
India's oil output has been stagnant at 32 million metric tons annually and its large import requirements leaves its economy vulnerable to rising crude oil prices, which surged 34 percent in New York last year.

The biggest passenger airliner the world has ever seen will roll out of its hangar for the first time Tuesday to proud smiles from European leaders who backed its construction--and a scowl from the US company Boeing, whose king-of-the-skies status has been lost, AFP reported.
For when the Airbus A380 emerges from its assembly hangar in Toulouse, southwest France, its huge, 80-meter (262-foot) wingspan will be carrying much more than technological advances--it will also be a potent symbol of European prosperity and cooperation usurping American supremacy.
French President Jacques Chirac, German Chancellor Gerhard Schroeder, British Prime Minister Tony Blair and Spanish Prime Minister Jose Luis Rodruigez Zapatero will all be on hand to watch the giant aircraft presented with pomp before international media. Their countries were key in allowing Airbus to develop and build the A380, which, once it clears test flights starting in March and begins commercial service next year, will easily eclipse the Boeing 747 that has reigned as the biggest people-mover in the skies over the past 25 years.
An A380 with a standard configuration of first, business and economy class will be able to seat 555 passengers on its two full-size decks--139 more than a similarly set-up 747--and offer unprecedented luxuries such as bars, bedrooms, gyms and lounges.
With an all-economy arrangement and no leg-stretching extras, the A380 will be able to pack in 840 passengers. In an all-freight configuration, it will hold 150 tons of cargo.
The cost efficiency of flying large numbers of people at an estimated 20 percent saving per passenger has prompted 13 airlines, including Emirates, Singapore Airlines, Qantas, Virgin Atlantic and Air France, to order a total 139 of the new Airbus "superjumbos", each of which has a catalogue price of between 263 and 286 million dollars.
Airbus, which is 80 percent a subsidiary of the European Aeronautic Defense and Space Company and 20 percent owned by Britain's BAE Systems, is banking on the juggernaut jet driving profits for decades to come.
"We're expecting deliveries to reach 35 a year from 2008. The A380 will account for 25-30 percent of our sales and a bigger part of our earnings," Airbus chief Noel Forgeard told Friday's edition of the German newspaper Sueddeutsche Zeitung.
But Boeing, which for the second year running has been trumped by Airbus for worldwide plane sales, is hitting back over the threat to its business.
A challenge it lodged over state subsidies to Airbus was headed to the World Trade Organization for arbitration until last Tuesday, when both companies agreed a three-month truce for negotiations following a counter-challenge by Airbus over US aid for Boeing.
At the same time, the US company is pushing on with plans to build its 7E7 Dreamliner, a midsize long-range aircraft that puts fuel efficiency ahead of passenger loads. So far, though, advance sales interest in the 7E7 has been disappointing--and Airbus has also announced an A350 model to compete in the same market.
With Airbus on a roll, little seems to be standing in its way to parlaying A380 success into European dominance of commercial plane sales for the foreseeable future.
The only turbulence being felt in the company seems to be coming from the direction of the cockpit. Forgeard will be promoted to co-chief executive of EADS in a couple of months after strenuously dislodging Philippe Camus from the job.
The dollar's long slide against the euro is a source of potential concern, but Forgeard said Airbus's hedging policies will protect the company to 2007, pushing the prospect of significant margin-cutting off into the future.

VILNIUS, Lithuania, Jan 16--Beleaguered Russian oil giant Yukos will Monday send negotiators to Lithuania to push for the right to exercise an option to acquire 20 percent of the only oil refining company in the Baltics, Mazeikiu Nafta, a move the authorities in Vilnius oppose.
"We shall meet the representatives of Yukos on Monday, when a meeting of the Mazeikiu Nafta refinery board is to be held," Nerijus Eidukevicius, head of the board, told AFP.
"Michail Elfimov, president of Yukos RM, is to come to the meeting of the board, so we shall have the opportunity to discuss the issue of the option," Eidukevicius added.
Yukos, which took control of Mazeikiu Nafta from the US firm Williams in 2002, owns 53.7 percent of the company but faces the prospect of bankruptcy in a politically charged campaign by Moscow to reclaim back taxes from the Russian group.
Under an agreement with the Lithuanian government, Yukos has the right to buy 9.72 percent of newly issued Mazeikiu Nafta shares for $75 million (57 million euros).
The same agreement would also allow Yukos to buy another 11.5 percent stake in the refinery from the government, which currently has a 40.6 percent stake.
"We think that it is not the right time to exercise the option, as Yukos' current situation is not clear and nobody can predict the company's future," Eidukevicius said. "We would like to discuss that they want to obtain new shares, whether they are capable of doing it, and whether they will pay for the emission if it is issued," he added.
The price for the Mazeikiu Nafta stake during the option would be considerably lower than its current market price, which rocketed by some 25 percent last month in anticipation of dividends after reports of record profits of some 600 million litas (173.7 million euros) last year.
Analysts say Yukos, in seeking an escape hatch from its financial woes, could sell its stake in Mazeikiu Nafta and bring in a much-needed $850 million (643 million euros) to its depleted coffers.
The Mazeikiu Nafta refinery acquires about 63 percent of the crude oil it needs from Yukos, with the rest coming from other Russian companies.

Calisto Tanzi

ROME, Jan. 16--Calisto Tanzi, founder of the bankrupt Italian food giant Parmalat at the heart of a huge finance scandal, apologized Saturday to savers who suffered ruin from the company's meltdown, AFP reported.
"I apologize to all who have suffered so much damage as a result of my schemes to make my dream of an industrial project come true," he said in a statement.
Some 135,000 people were victims of the group's debacle, one of Europe's biggest post-war financial scandals. Many small savers were completely ruined.
Tanzi's creation Parmalat was declared insolvent in 2003 and placed under special administration after a gaping hole of 14.27 billion euros ($17.3 billion) in its accounts was revealed.
The group was put in the hands of a state-appointed administrator and became the target of an official probe into possible fraud by company management.
Tanzi's statement was read out by his lawyer after police questioned the tycoon in Parma, the company's home town.
Tanzi "was "perfectly aware that the apology can have only moral value," said attorney Giampiero Biancolella, "He is willing to acknowledge his own responsibilities and suffer the consequences."
He realized it was his duty to cooperate fully with the courts to reconstruct events leading to the debacle and provide information identifying others who could help to reconstruct the facts.
Several members of Tanzi's own family were involved in the company's management and a number of Italian and foreign banks are suspected of having been in the know about the true state of Parmalat's ruinous finances and having hidden this from savers in order to protect their own interests.
The Italian government appointed a special commissioner, Enrico Bondi, to rescue the group. Bondi has since sold off Parmalat subsidiaries and begun legal actions against 80 banks including major international names such as the Swiss bank UBS, Deutsche Bank and Bank of America.
Twenty-nine people including Tanzi himself have already appeared before a Milan court suspected of allegedly manipulating stock market prices, false accounting and obstructing the work of the stock market watchdog body.